Commodity Currencies Still Look Strong after US Dollar Bounce: NZD/USD, AUD/USD, USD/CAD

Watch commodity currency currencies for continued signs of continued strength


With Joe Biden finally announced as the US President-elect over the weekend, no one was surprised that stocks would be stronger today.  More stimulus and more oversight with a split Congress (for now) would cause stocks to go bid and the US Dollar to plunge.  However,  positive news came out before the stock market open from Pfizer:  their new vaccine was 90% effective against the coronavirus.  Stocks soared, but the DXY barely moved lower, and then moved HIGHER!  Why?  In a perverse way, good vaccine news could mean less stimulus, less US Dollars in the system, therefore higher prices. However, even with the strong US Dollar today, commodity currencies such as the New Zealand Dollar, Australian Dollar and the Canadian Dollar still look strong as well!


Source:  Tradingview,

As we mentioned in the Currency Pair of the Week this morning, the RBNZ meets this week.  Their data has been better relative to many countries (ex: Unemployment Rate) and although the RBNZ is still in easing mode, markets are cautiously optimistic regarding the Kiwi.  NZD/USD has been trading in a sideways channel, since early July.  The pair looked as if it may be in the process of forming a head and shoulders pattern.  However, with the breakout today above the top channel line, that move appears to be invalidated.  Although the day isn’t over, the Kiwi may be forming a shooting star, which could indicate a potential reversal.  However, buyers will be waiting near support at .6780 and again near .6725 to add to long positions.  The target for the move of the breakout of the channel is near .7075, however the pair must first break through the psychological resistance level at  .7000 to get there.


Source:  Tradingview,

Much of the same narrative for the Kiwi can be applied to AUD/USD.  The pair broke out from a flag pattern earlier this morning and began moving higher.  On a daily timeframe, todays candle appears to be forming a shooting star (not shown), however on a shower 60-minute timeframe, price is near support between .7260 and .7270.  Buyers will be waiting to add to their long positions here and below at .7220.   Resistance is at today’s highs near .7340/50 and the target for the breakout from the flag pattern is near .7390.


Source:  Tradingview,

On a 240-minute timeframe, USD/CAD broke above the descending wedge on September 21st (top green line) and began trading in a sideways channel.  However, today, price broke through the bottom of the channel and tested the falling channel from the wedge near 1.2930.  Price has bounced to near the psychological resistance level of 1.3000 where sellers were waiting.  Above there, resistance is at previous support near 1.3180.  Support is at today’s lows near 1.2930, however the target for the breakdown from the channel is near 1.2575!

Watch the commodity currency currencies for continued signs of continued strength.  While some of the major USD pairs have moved lower, the Aussie, Kiwi and Loonie all seem to be hanging around!

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account